More on the Export Control Reform Initiative

The current system is based on two different control lists, administered by two different departments, and three different primary licensing agencies

By Patrick Burnson, Executive Editor ·
December 21, 2011

In an effort to focus governmental resources on the most serious national security threats, in August, 2009 President Obama directed a broad-based interagency review of the U.S. export control system.

To support this effort, a newly created Export Promotion Cabinet, in collaboration with the 20 federal agencies comprising the Trade Promotion Coordinating Committee conducted a year-long assessment which found that the current U.S. export control system does not sufficiently reduce national security risk because its structure is overly complicated, contains too many redundancies and tries to protect too much.

It cited the fact that the current system is: (a) based on two different control lists; (b) administered by two different departments and three different primary licensing agencies (none of which sees the licenses issued by the other); (c) also affected by a multitude of enforcement agencies with overlapping and duplicative authorities. Many of the varying oversight agencies have separate IT systems (none of which are easily accessible or compatible with each other; some have no IT systems at all yet still issue licenses. The assessment concluded that the fragmentation of the system combined with the extensive list of controlled items inhibited the national security objectives.

In April, 2010, former Defense Secretary Gates called for the removal of licensing requirements for the bulk of tens of thousands of license applications for which the Export Administration Regulations (EAR) permit export to EU and NATO countries. Gates advocated creating a system in which “higher walls are placed around fewer, more critical items.”

The assessment led President Obama to outline the foundation for a new export control system in August, 2010, resulting in the launch of the Export Control Reform Initiative. Generally, the reforms include reconciling various definitions, regulations and policies for export control with a goal of creating a single control list, one licensing agency, a unified information technology system and a new Export Enforcement Coordination Center, dubbed “E2C2.”

The first step toward implementation - application of new criteria for rebuilding the various lists - was announced by President Obama in December, 2010. In July, 2011, the Commerce Department published a proposed rule advocating several fundamental changes to the export control system.

These included a new framework for controlling defense articles deemed less militarily significant by moving them from the more restrictive U.S. Munitions List to the more flexible Commerce Control List. The proposed rule also defined the licensing policies for those items to be moved and proposed a single definition for terms central to the system. The proposed rule marks the next step toward harmonizing the two control lists. E2C2 opened on November 9, 2011.

December 21, 2011

About the Author

Patrick Burnson, Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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